With over a decade of experience, Michael Bailey shares real-life examples and expert advice on navigating the intricate intestate laws. Listeners will gain understanding on how to effectively structure their estate plans to avoid relying on default state rules, which may not always align with personal wishes. Michael also explores the importance of spousal protections, especially in second marriages, and how trusts can play a critical role in safeguarding one’s legacy. Tune in to equip yourself with the knowledge to make informed estate planning decisions.
00:26:19 Closing Remarks and Broadcast Information
SPEAKER 01 :
Welcome to Mobile Estate Planning with your host, Michael Bailey. Over a decade ago, attorney Michael Bailey turned his attention to estate law after he recognized the unacceptable number of adults without proper end-of-life planning. Michael recognizes that many of his clients have difficulty finding the time for making a proper estate plan. That’s why he became the Mobile Estate Planner. He will go to wherever you are to assist you with your estate planning, including writing wills, trusts, and giving you the information you need to avoid probate. Now, ATX, Ask the Experts, presents Mobile Estate Planning with your host, Michael Bailey.
SPEAKER 02 :
All right, good afternoon. Welcome to Mobile Estate Planning with Michael Bailey. So we can do something besides just leave your family alone. You’re listening to 560 KLZ AM, 100.7 FM, possibly the KLZ 560 radio app. Phone number to talk to me on the air is 303-477-5600. And once again, that’s 303-477-5600. And my direct line is 720-394-6887. And again, that’s 720-394-6887. So as we talk, you know, estate planning and… And sometimes I think people think that there’s like these rules of estate planning that are so rigid that there’s, you know, in any one situation, there’s only one thing that can happen. And I talk a lot on this show about how, you know, we’re trying to figure out what you want to do. And, you know, that in estate planning, there’s not just one way of doing things. But it seems like when I sit down to meet with people, a lot of people like, oh, well, you know, But, you know, if this happens, you know, what happens? How does that work? And I’m like, well, how would you want it to work? Because that’s an important question. You know, well, my client this morning, I have two kids, so it’s going to go 50-50 to the two kids. And if one of the kids died, I said, okay, well, then what do you want to have happen? Well, I’ll go back to the other kid. All right, cool. And, you know, and then later on my client says, well, what happens if all three of us are on the same airplane and we all die? Then what happens? You know, what, how does that work? What’s going to happen? And I was like, okay, well, what do you want to have happen? Like the default rules are, are that the courts and the named representative will look for your closest living relatives. And that’s what the Colorado Intestate Statute says. Now, the Colorado Intestate Statute is the rules set up by the legislature that say what happens to your assets if you die and you don’t have a will and you don’t have beneficiary designations and you don’t have anything set up of what would happen to your assets. These are kind of the default rules. And so if you’re going to rely on the default rules, then we go, okay, we got to look at what those default rules are and say, how do we work our way through them? Now, the default rules are kind of what you would expect from the state legislature. They’re what you would expect from a legislative body. They’re going to be written, and they’re going to be set up, and they’re not necessarily going to be super clear. Because they are, in fact, default rules written by a state legislature. And the state legislature are not exactly known for having the most clear rules. It’s one of the things about… having a state legislature, they write statutes and rules that are kind of, they’re there and they are, they’re set up and they’re generally applicable to all sorts of different situations and they can be open a lot for interpretation. And so because there’s interpretation and because things need to be interpreted, and that’s part of what courts do is courts will interpret them. Sometimes the state legislature will have kind of legislative notes where you get, like if you go to look up a statute online, there will be links that show your legislative notes so that they can talk a little bit about what it is that the state legislature is has in mind and how they want things interpreted and things like that so of course we go okay we’ve got um you know state legislature trying to look and figure out what it is that is so it’s it’s not always crystal clear what those things are now in the case of the intestate statute there are some pretty clear But it’s based on situation. If you die and you have a spouse that’s living, and you have children, and children are all the children of the same spouse, then everything will go to your spouse. Now, if you die and you don’t have a spouse living, and you have children, all of which were children of the same, from the same spouse while you were alive, then everything go to those children. But what if you, but then if you have a spouse that’s, if you die, you have a spouse that’s living and you have children with that spouse, but you have a child with a different spouse, then there’s a whole formula of what percentage goes to the surviving spouse and what percentage goes to each of the kids and amounts go to each of the kids and go everywhere. So if we were all exactly the same and we lived the kind of simple, perfect, average American life where you get married and you have 2.3 kids, apparently, because that’s the average is to have 2.3 kids, which you’re like, well, how do you have 0.3 kids? Well, you don’t. But when you average everything out, you can get fractionals, and I get it. Yeah. But if you got married once and everybody only got married once and there was no such thing as divorce and no such thing as early death and remarriage of spouses, then everything would be super simple. We’re like, oh, well, it goes to the spouse, and then it goes to the kids, and we all move on. Well, life just isn’t quite that simple. It’s unfortunate. I have friends who have either been – it was interesting to go to a high school reunion, whether it’s a 20- or a 30-year high school reunion – What I noticed was most of the people there were all kind of in similar situations. Most people had gotten married. Some had gotten divorced. Some had lost a spouse. Most people had kids. Not everybody. Almost everybody had a job and they were working. And it wasn’t that the best athlete was still the best athlete and still successful. playing and dominating. It wasn’t that the best science student was now the most brilliant scientist ever. We’d all kind of reached a place where we were all adults and had kind of normal lives. But everybody’s situation was a little bit different. Not everybody was married with 2.3 kids and had no other things. So because life isn’t the same for everybody, the generally applicable statutes can become confusing. And so, you know, you don’t, like I tell my clients, hey, you don’t necessarily want to rely upon the generally applicable statutes because they can be confusing and also they may not do what you want them to do. So you are listening to Mobile Estate Planning with Michael Bailey here on KLZ 560 AM or on 100.7 FM. phone number to talk to me on the air is 303-477-5600 and again that phone number is 303-477-5600 and my direct line is 720-394-6887 once again that’s 720-394-6887 So because of that, just because not everybody’s situation is the same, the state legislature is trying to put together rules that would apply to anybody in all situations. Well, if you’ve got, okay, surviving spouse, makes sense. Give money to surviving spouse. To the kids, makes sense. But if there’s no spouse and no surviving kids, then who do we give money to? And the Colorado State Legislature says, well, we’re going to look up and see if your parents are still alive. And then we’ll look out and see your siblings. And then if your siblings are not there, then we’ll look down to nieces and nephews. And we don’t have those. And we’ll go back up and look for, you know, we’re looking for your closest living relatives, basically. And if that’s what you want to do, then that’s perfectly fine. But you don’t necessarily want to. Sometimes relying upon the default rules can lead to undesirable outcomes. I’ve had lots of people who I meet with and we talk about, okay, well, what happens if everybody’s gone? I say, well, it goes to your closest living relatives. And lots of people are like, oh, well, you know, that’s no good because I don’t like my brother or my sister and I don’t get along. Or, you know, my brother-in-law has declared that we are terrible, horrible, evil people. So we don’t want to have anything go to them. I say, cool. Well, let’s talk about who you do want to go to. Do you want to go to our siblings? Oh, yeah, the other siblings are great. I’m like, well, let’s say it’s going to go to your other siblings then. instead of relying upon the default rules and the default rules you know are those type of things but then there’s more to the default rules than just those rules um you know sometimes i get people who they’ve always kept their finances separate in their marriage and so they’re like oh well we want to keep our finances separate when we die say okay well we got to talk about that because Colorado has rules that are spousal protection statutes, meaning that if you are married and you pass away, in order to completely disinherit your house, sorry, your house, disinherit your spouse, see, spouse, house, they rhyme. What can I say? But if you’re trying to not leave anything to your spouse, the default rules from the Colorado State Legislature are going to say, well, hold on just a minute. If you’ve been married for one year, then your spouse is entitled to 5% of your estate. If you’ve been married for two years, it’s 10%. Three years, 15%, so 5% per year. All the way up to if you’ve been married for 10 years, your spouse is entitled to inherit at least 50% of the assets. And so if you’ve been married to somebody for a long time and you don’t want to leave them your assets, then your spouse is going to need to agree to take less than that 50%. And, you know, sometimes people will do that. I see that a lot of times with people who are on their second or third marriage or, you know, someone who, They raised all of their kids, and then people, they lose their spouses in their 50s or 60s, and then they find somebody else and find kind of senior love at age 65 or 70, and they get remarried. And you’re like, cool, good for them. That’s so exciting. But they’ve both got their own families. They’ve both got their own kids. They’ve both got their own assets that they accumulated over the course of their prior marriages. And so they may not really want to leave all of their assets or even 50% of their assets to their surviving spouse because it was a second surviving spouse and it would make more sense for them to leave those assets to their children and not necessarily to the surviving spouse. Now, sometimes… And so, you know, they’re like, oh, well, you know, it’s not like they’re not scheming going, we want to cut out our surviving spouse. We don’t want to leave anything to a surviving spouse. But it makes sense if someone had built an entire life and financial and, you know, life portfolio. So you’ve got, say, a person, you know, that the husband has five hundred thousand dollars. And the wife has $2.5 million. Then they get together, they get married. You’re like, well, do we, does the husband really, you know, the husband says, well, I have four kids. And the wife says, well, I have two kids. Well, should we take the $3 million and split it six ways? And the wife says, well, my two kids were from my marriage and, you know, want to have, you know, they’ve kind of understood that even though dad died, they were still going to be $1.25 million per person. And so just getting married to you, I don’t want to upset my kids. I don’t want to tell my kids, oh, well, you’re going to get a whole lot less money. That’s just how it’s going to go. So it would make sense that they would, at that point, want to do something like say, hey, you know what? I understand that we’re getting married for love and this is not about assets. I mean, you can have the… proverbial gold digger where it would be just about assets but hopefully most people most people that i know aren’t necessarily marrying in their 50s and 60s for we’re going to get rich off this it’s just not kind of how it works but if we take so in that case they don’t necessarily want to rely upon the default statutes that are going to give spousal protections now they may not want to completely ignore their you know current spouse the Wife with the $2.5 million may say, well, you know, I’m going to go ahead and leave, you know, a million dollars in a trust. And that million dollars can be used to help take care of my second husband until such time as he dies. But then whatever’s left over goes back to my kids. And that way, one spouse can leave assets to the other one, leave them available for use, but then still dictate where things go. And I have a couple of clients who I’m working with right now who they’re on their second marriage. They’ve They moved into a house together and they’re like, oh, well, how should we structure this? I had one who was like, oh, well, you know, we were talking about this. And then our Google AI assistant opened up and said, well, joint tenancy is probably the easiest way to do that. And they’re like, well, what do you think? And I said, well, I think if you’re taking legal advice from AI, you might want to. Consider not. And you might want to consider that asking me to explain why an AI would suggest something may not be the best use of my time or your time. I assume as AI increases and gets better, that there will be more sophisticated analysis from an AI than what we currently have. But I talked to them about that, and this person’s, what they wanted to do was say, okay, well, when one of us dies, we want the other one to be able to stay in the house. And then when we both die, we want to make sure that 50% goes to husband’s kids and 50% goes to wife’s kids. I said, okay, joint tenancy probably is not the right way to do that. Because with joint tenancy, you have two joint owners, husband and wife. When one dies, full ownership transfers to the other one. And they’re like, oh, well, that’d be fine. And then we can just set it up in our state plan so it goes to the other one. I’m like, yes, that’s true. But here’s the question. You’re on your second marriage. You found love later in life. What if you pass away and the survivor finds love again, later again? And then, you know, they get together and they’re living in the house and they say, oh, well, I’d want to switch it up so that my new third spouse gets some. Well, that would defeat what the intent was from this second marriage. And if someone is the sole owner of the house, then they’re not going to be any restrictions on their ability to change up how they’re going to get away. They can say all they want. No, I would never do that. I would never give it away to somebody else until life circumstances change. And if they have their third love of their life that they’ve married. And the third love of their life, when they die, they’re like, oh, well, I can’t leave anything to you, third love of my life, because I promised second love of my life I would give everything to their kids. Well, that works great right up to the point where people change their minds, people do things. So joint tenancy and transferring full ownership might not be the best way to go. So you are listening to Mobile Estate Planning with Michael Bailey here on 560 KLZ AM, also heard on 100.7 FM or the KLZ 560 radio app. Phone number to talk to me on the air, 303-477-5600. Once again, 303-477-5600. And my direct line is 720-394-6887. And once again, 720-394-6887. Before I go back to talking about joint tenancy and tenancy in common and trust and stuff, I was just reminded of kind of a silly story. There was a day a couple years ago I was driving home, and I got a call from somebody who was trying to call into John Rush’s show, and John Rush is up next. And they were trying to call in to answer a question and talk to John. But I think one of my commercials had run right before or right after very close to when they gave out the number. So they had called my direct line. And I said, well, you know, that’s here’s the studio line number and you need to call them. They said, no, I know that it’s this number. I’m like, OK, I want to believe you, but this is my direct line. I am not KLZ. You know, I’m not entirely sure what to tell you. You know, I think there was maybe been some confusion there. And so, you know, the person eventually, it was kind of funny that I was like, no, this is not the correct number. Here is the correct number. They’re like, no, they were insistent that it was, that my direct line was the correct number. And I was like, no, I’m not trying to be a punk here. I’m just saying you’ve reached the wrong number. I can give you the correct one so you can call in. But I think they were calling in for some sort of contest and they might have been disheartened that they might not have been the seventh caller or something like that. Like, I promise I’m trying to get you to the correct place. I promise I am. But, you know, that’s what I’m trying to do as an estate planning attorney. I’m trying to get you to the correct place. So joint tenancy for this particular client, probably not going to work. Now tenants in common, that means each spouse would own 50%. And when one spouse died, they could say where their 50% was supposed to go. And the other spouse could say where their 50% would go when they were supposed to die or when they died. Which would mean that, you know, in this case where they wanted to go to each of their respective families, they could do so by writing that into their own estate plans. But they also wanted to have the surviving spouse be able to stay in the house until such time as the surviving spouse passed away. So they wanted… you know, to do both things. And so, you know, in a tenancy in common situation, if like, say, the wife died first, and then her ownership of her portion goes to her kids, we could say, okay, well, kids, make sure that, you know, this guy who’s not your dad, but, you know, married mom again, make sure he’s okay staying in the house. And the kids may be like, well, you know, we’re not entirely sure that we’re all fully comfortable with that. Also, if he gets older, then the house might get a little bit beat up. If the house gets a little bit or a lot beat up, then it’s not going to be worth as much. We’re kind of running out of money now, so we’d like to be able to sell the house. And then you create friction and tension between your kids and your new spouse who’s living in a house. So one of the ways that you can continue to or that you can control money from beyond the grave and that you can ensure that your wishes are happening is to use a trust. Because the trust will dictate what happens to those assets after you die. I say, okay, well, if we put in a trust, then the trust will continue to own the assets and the trust will continue to allow a surviving spouse to live in that house. And then at the time of second spouse’s death, we say, okay, now we’re going to split it up between husband’s kids and wife’s kids. And so in that case, it would make sense to me that You would split things up upon second death as opposed to upon first death. And then the kids can be like, oh, well, we really would want that money sooner by selling the house now. They say, yeah, but the terms of the trust are such that you can’t just go and take that house and sell it right now because it doesn’t belong to you. In the future, it will belong to you. But if it will belong to you in the future, it’s probably not going to belong to you currently if the trust says it doesn’t belong to you currently. I mean, I hope to own my house in the future, but I own it currently as well. That’s where I live, and that’s where I’ve got the puppy dogs and kids, and we’re all there. Right now, my oldest is off at college, but her room is still there, and the middle daughter likes to go hang out in her older sister’s room just because middle daughter’s like, well, she’s tired or wants to do homework, and so she’ll go lay on her sister’s bed and then when it’s time for bed she can go lay in her own bed you know it’s kind of psychological thing of my bed is for sleeping not for doing homework or reading or something else and i totally get that but you know i happen to own my house now and i hope to own it in the future which makes sense but my parents house is owned by a trust The trust says my parents can continue to live there for as long as they can and as long as they’re alive and as long as it’s safe. But once my parents have both passed away, the house will be given to the four of us kids. Well, the four of us kids don’t own the house right now. We can’t go to mom and dad and say, oh, sorry, we’re going to have to kick you out because we need to sell this house and make some money. And my parents say, well, where are we supposed to live? We’re like, we don’t know. Not our problem. And that’s not a conversation we would ever have with our parents. But I’ve seen it happen with other people. I’ve seen it happen with some people who come to me for help or clients whose kids have gone rogue. And so we’re trying to avoid those types of conflicts. We’re trying to set something up that will accomplish what you want but avoid conflicts to the degree possible. Is it possible to avoid all conflicts? Probably not because there’s no accounting for people. I mean, I like to think that I don’t have – too many conflicts with people, but sometimes I do and try to avoid that. But we’d all like to think that there would never be any conflicts between siblings or between family members after people die, but I’ve been doing this for long enough to know that that’s just not true either. I’m amazed how many people I’ve seen where I’m like, huh, did mom and dad keep the peace while you were alive? Because the kids are kind of at each other’s throats. So as we’re setting up an estate plan, we’re doing what you want. We’re trying to avoid conflict, and we’re doing it in a way that is within the law but works for what you want without needing to rely upon the default rules because the default rules may not get you what you want. So music tells me that my time is up. Thank you so much for listening to Mobile Estate Planning with Michael Bailey. My phone number is 720-394-6887. And once again, that’s 720-394-6887. I’ll be back next week, but stay tuned for John Rush and Rush Reason. And we’ll talk to you later. Thanks and bye.
SPEAKER 01 :
Mobile Estate Planning with Michael Bailey will return to ATX next Wednesday at 2.30 here on KLZ 560, AM 560, FM 100.7, and online at klzradio.com.
